Don't Know Much About History, Anniversary Edition: Everything You Need to Know About American History but Never Learned (Don't Know Much About®) (56 page)
Authors: Kenneth C. Davis
What was so “great” about the Great Depression?
Wall Street’s Great Crash of 1929 did not “cause” the decade of the Great Depression that followed, any more than the assassination of Archduke Ferdinand had “caused” World War I. The crash was a symptom of the economy’s serious disease. It was the fatal heart attack for a patient also suffering from terminal cancer. By the time the market rallied a few years later in the Little Bull Market, it was too late. The damage had been done. The crash had been the last tick of a time bomb that, when it exploded, brought down the world economy.
America had suffered depressions before. But none of them had been capitalized like the Depression of the 1930s. None had ever lasted so long, and none had ever touched so many Americans so devastatingly. After the crash, the economy was paralyzed. In one year, 1,300 banks failed. There was no such thing as Federal Deposit Insurance guaranteeing the savings of working people. Hard-earned savings disappeared as 5,000 banks closed during the next three years, their assets tied up in the speculating that created wealth but disappeared in the crash, or in mortgages that the jobless could no longer pay. Without banks to extend credit and capital, businesses and factories closed, forcing more workers onto unemployment lines. In 1931, Henry Ford blamed the laziness of workers for the calamity. A short time later, he closed a plant and, with it, 75,000 jobs were lost.
The jolted American system got two more shocks when the empires of Ivar Krueger and Samuel Insull came tumbling down. Insull had built a pyramid of holding companies and used them to push up the value of his stock. By 1932, the artificial values had fallen to their true worth, declining in value by some 96 percent. Indicted by a Chicago grand jury, Insull fled to Greece, where he hoped to escape extradition. When Greece later signed an extradition treaty with the United States, Insull, who had once surrounded himself with three dozen bodyguards, disguised himself as a woman and sailed for Turkey. Eventually he was brought back to the United States and tried. But Insull escaped punishment. The holding companies he had used were outside regulation; all his manipulations were technically legal.
Ivar Krueger was less lucky. Living in a luxurious Paris apartment, he was also revealed as a swindler. Once an adviser to President Hoover, he had stolen more than $3 million from investors. Krueger didn’t wait for an indictment. He shot himself in the spring of 1932, before the worst of his schemes was even brought into the open.
Before the Great Depression, America had absorbed periodic depressions because most people lived on farms and were able to produce what they needed to survive. But the American and world economy had been thoroughly revolutionized in the early twentieth century. This was an urbanized, mechanized America in which millions were suddenly unemployed, with no farms to go home to. Statistics are virtually meaningless when it comes to the magnitude of joblessness. Official numbers said 25 percent of the workforce was unemployed. Other historians have said the number was more like 40 to 50 percent.
Through his last three desperate years in office, Herbert Hoover continued to voice optimism. Like most economists of his day, Hoover believed that depressions were part of the business cycle. America had suffered them before and had shaken them off after a period of dislocation. But this time was different. Hoover made a long, steady stream of pronouncements about how the corner had been turned. Instead, things turned bleaker. As millions were losing their homes, unable to pay rent or mortgages, Hoover and other members of the wealthy class made some incredible statements. When the International Apple Shippers’ Association, overstocked with apples, decided to sell its vast surplus to unemployed men on credit so that they could resell them on street corners for a nickel apiece, Hoover remarked, “Many people have left their jobs for the more profitable one of selling apples.” Henry Ford, who put 75,000 men out of work and on the road as “hoboes” in search of work, said of the hundreds of thousands of wandering men, women, and children, “Why, it’s the best education in the world for those boys, that traveling around! They get more experience in a few months than they would in years at school.” J. P. Morgan believed that there were 25 or 30 million families in the “leisure class”—that is, able to employ a servant. He was startled to learn that there were fewer than two million servants in the entire country.
Hoover clung to his optimistic line. “Business and industry have turned the corner,” he said in January 1930. “We have now passed the worst,” was the cheery word in May. Prosperity was always right around the corner. But the country never seemed to reach that corner. Hoover has come down in history as a do-nothing Nero who fiddled while Rome burned. That portrait is not quite accurate. The problem was that just about everything he tried either backfired or was too little, too late. In 1930, he went along with a protectionist bill—the Hawley-Smoot Tariff Bill—which threw up trade barriers around the United States. This simply prompted the European countries to do the same thing, worsening the crisis both in the United States and in Europe. By 1931, the Depression had spread throughout Europe, where the scars of the war were still not healed and the crush of wartime debt contributed to the crisis. Austria, England, France, and, most ominously, Germany were all sucked into a violent whirlpool of massive unemployment and staggering inflation.
Hoover was steadfast in his refusal to allow the government to help the jobless, homeless, and starving through government relief programs he viewed as Socialist and Communist. He did, at least, ignore the advice of one of the nation’s wealthiest men, Treasury Secretary Andrew Mellon (1855–1937), whose tax policies in the 1920s had contributed to underlying flaws in the American economy. Mellon advised a complete laissez-faire response, proposing to “liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate.” He thought that through this scorched-earth policy, “people will work harder, live a more moral life. Values will be adjusted and enterprising people will pick up the wrecks from less competent people.” Hoover eased the aging Mellon out of the Treasury and made him ambassador to England.
Hoover set up a belated public works program that, by the time it started, was woefully inadequate, unable to replace all the local building projects that had been killed by the banking collapse. In 1932, bowing to the pressure of the time and going against his deep conservative grain, Hoover created the Reconstruction Finance Corporation, which loaned money to railroads and banks.
But even in this, Hoover was snakebit. To the millions of unemployed and starving, the RFC was a bitter symbol of Hoover’s willingness to aid corporations while showing complete indifference to the poor. In spite of the growing misery, the lengthening bread lines, the “Hoovervilles” of cardboard shacks being thrown up in America’s large cities, the utter despair of hundreds of thousands without homes or hope, Hoover staunchly refused to allow government to issue direct aid. By his lights, it was socialism to do so, and was completely contrary to his notion of “rugged individualism.”
In the midst of the Depression, buglers called President Hoover and the first lady to seven-course dinners served by a small army of white-gloved servants. President Hoover thought that keeping up regal trappings and spiffy appearances was good for national morale. Outside, Americans were fighting for scraps from garbage cans. But some “rugged individuals” were going to give Hoover an unpleasantly close look at life on the other side of the Depression fence.
In the summer of 1932, the Depression’s worst year, 25,000 former “doughboys”—World War I infantrymen, many of whom were combat veterans—walked, hitchhiked, or “rode the rails” to Washington, D.C. Organizing themselves into a penniless, vagrant army, they squatted, with their families, in abandoned buildings along Pennsylvania Avenue and pitched an encampment of crude shacks and tents on the banks of the Anacostia River. They had come to ask Congress to pay them a “bonus” promised to veterans in 1924 and scheduled to be paid in 1945. Starving and desperate men, they had families going hungry, no jobs, and no prospects of finding one. They needed that bonus to survive. Calling themselves the Bonus Expeditionary Force (BEF), they were better known as the Bonus Army.
Their pleas for relief fell on deaf ears. To Hoover, Congress, lawmen, and the newspapers, these weren’t veterans but “Red agitators.” (Hoover’s own Veterans Administration surveyed the Bonus Army and found that 95 percent of them were indeed veterans.) Instead of meeting the BEF’s leaders, Hoover called out the troops, commanded by General Douglas MacArthur (1880–1964) with his young aide Dwight Eisenhower (1890–1969). The assault was led by the Third Cavalry, sabers ready, under the command of Major George Patton (1885–1945). Behind the horses, the U.S. Army rolled out to meet the ragged bunch of men, women, and children with tear gas, tanks, and bayonets.
Patton’s cavalry first charged the Bonus Marchers, now mixed with curious civilians who were getting off from work on this hot July afternoon. Following the cavalry charge came the tear-gas attack, routing the Bonus Army from Pennsylvania Avenue and across the Eleventh Street Bridge. Disregarding orders—a common thread running through his career—MacArthur decided to finish the job by destroying the Bonus Army entirely. After nightfall, the tanks and cavalry leveled the jumbled camp of tents and packing-crate shacks. It was all put to the torch. There were more than one hundred casualties in the aftermath of the battle, including two babies suffocated by the gas attack.
Pushed out of the nation’s capital, the Bonus Army dissipated, joining the other two million Americans “on the road.” Some states, like California, posted guards to turn back the poor. The violence in Washington, D.C., was the largest but not the only demonstration of a growing anger and unrest in America. During 1931 and 1932, there had been a number of riots and protests, mostly by the unemployed and hungry, sometimes by children, that were put down with harsh police action.
The assault on the Bonus Marchers came as the 1932 presidential campaign was getting under way. A grim Herbert Hoover had been renominated in June by the Republicans on a platform that promised to balance the budget, keep tariffs high on foreign goods, and—in a reversal of its position four years before—repeal Prohibition, allowing the states to control alcohol.
Believing that only a major disaster could prevent them from recapturing the White House, held by Republicans for twelve years, the Democrats met in Chicago. Three leading candidates emerged for the nomination: Al Smith, the 1928 standard-bearer who had been swamped by Hoover; the powerful Speaker of the House, John Nance Garner of Texas, who had the support of newspaper czar William Randolph Hearst, who in turn controlled the California delegation; and Al Smith’s handpicked successor as governor of New York, Franklin D. Roosevelt (1882–1945). Roosevelt led after the first ballot, but lacked the votes to win the nomination. In a classic “smoke-filled room” deal, Garner was promised the vice-presidency in return for his support of Roosevelt. On the fourth ballot, with Hearst throwing California’s delegates to Roosevelt, the popular governor won the nomination. Roosevelt immediately wanted to demonstrate that he was not going to be bound by any traditions. He flew to Chicago to accept the nomination, launching the tradition of the nominee’s speech to the convention. Roosevelt also wanted to demonstrate to the country that although crippled by polio, he would not be stopped from going where he wanted.
Not everyone agreed that it was a great choice. Two of the leading newspapermen of the day were H. L. Mencken and Walter Lippmann (1899–1974). Mencken said the convention had nominated “the weakest candidate.” Lippmann, perhaps the most influential columnist in the country at the time, was even more disparaging. He called FDR an “amiable boy scout” who lacked “any important qualifications for the office.”
It didn’t matter. The Democrats could have run an actual Boy Scout that year and won. The country might not have been sure about wanting FDR, who ran a conservative campaign but promised a “new deal” for the country and the repeal of Prohibition, establishment of public works, and aid to farmers. But they were sure they didn’t want Herbert Hoover. “General Prosperity” led the way for Hoover in 1928. But “General Despair” knocked him out in 1932. Roosevelt won the election with 57 percent of the popular vote, carrying forty-two of forty-eight states. The Democrats also swept into majorities of both houses of Congress.
After Roosevelt’s inauguration, the Bonus Army returned to Washington. Roosevelt asked his wife, Eleanor (1884–1962), to go and speak to the men, and let them have plenty of free coffee. The first lady mingled with the marchers and led them in songs. One of them later said, “Hoover sent the army. Roosevelt sent his wife.”
Must Read:
The Great Depression: America, 1929–1941
by Robert S. McElvaine.
A
MERICAN
V
OICES
From
FRANKLIN D. ROOSEVELT’S
first inaugural address, March 4, 1933:
This is pre-eminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great nation will endure as it has endured, will revive and will prosper.
So first of all let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.
Most of Roosevelt’s campaign speeches had been written for him, but a handwritten first draft of the inaugural address shows this to be Roosevelt’s own work. Yet the speech’s most famous line was old wine in a new bottle. Similar sentiments about fear had been voiced before. The historian Richard Hofstadter notes that Roosevelt read Thoreau in the days before the inauguration and was probably inspired by the line “Nothing is so much to be feared as fear.”
